OBC clocks GTB loss at Rs 750 cr

The Oriental Bank of Commerce is estimating Global Trust Bank's losses at around Rs 750 crore in the current financial year.

OBC Chairman BD Narang has convened a management committee meeting on Wednesday to take stock of the latest development.

The matter is also expected to figure in the bank's board meeting scheduled for Thursday to finalise the first quarter results. The board had last fortnight cleared a proposal to take over a bank with a strong presence in south India.

The OBC management yesterday swung into action and held initial consultations with GTB employees to gauge their mood and at the same time, assure them of a smooth transition. The OBC brass also sought the employees' estimate of GTB losses.

Senior OBC executives said the GTB employees projected losses to the tune of Rs 600 crore during 2004-05.

Independent analysts, however, pegged the figure at Rs 800 crore. "We are taking a mean estimate of Rs 700-750 crore," said an executive.

OBC hopes to get a tax rebate of Rs 250-300 crore by setting off GTB's losses against its profits in the current financial year.

The GTB's gross non-performing assets are estimated at Rs 1,500 crore, of which, around Rs 300 crore due from stockbroker Ketan Parekh and associates. "The Ketan Parekh dues are unrecoverable," said an executive.

"The OBC has been conservative in estimating a Rs 300-400 crore recovery from GTB's bad accounts," the executive added.

According to him, even the Reserve Bank of India opined that given OBC's strength in recovery, it would not be difficult for the bank to recover 40-45 per cent of GTB's non-performing assets during the year.

OBC was the first Indian bank to report zero non-performing assets last September and has continued to provide for all assets.

The bank has now put in place a 10-member team to work out the modalities of the merger, announced by the central bank on Monday.